Thursday, September 14, 2017

Le blog de Thomas Piketty — Re-thinking the capital code

I may be mentally ill.
Since 2012 I can't see the "Le blog de..." formulation without losing it. Not that it happens all that often but when it does...See link below.

From Le blog de Thomas Piketty:

Re-thinking the capital code
What should we think of the reform of the Labour Code defended by the government? The key measure, and also the one which is most highly criticized, consists in capping the compensation payments for unfair dismissal at one month’s salary per annum per year of seniority (and half a month for each year worked beyond 10 years). In other words, an employer can freely dismiss an employee who has spent over 10 years in the firm, without having to establish the slightest «real and serious cause» ; and without the judge being able to impose on the employer the payment of an indemnity greater than 10 month’s salary. The compensation for an employee who has been with the firm for 30 years cannot exceed 20 months’ salary.

The problem is that the social cost of dismissal, in terms of the payment of unemployment benefits and reclassification, is often much higher. Intended to strengthen recruitment incentives, this amounts to a licence to lay workers off and may well increase the arbitrary power of the employer, developing a feeling of distrust which is not conducive to long-term investment by employees. It may also increase the complaints for harassment or discrimination (which are not capped). It would have been more useful to speed up the judicial procedures and practice which are disgracefully slow in France.
What is really to be regretted is that the government has not even taken this opportunity to strengthen the involvement of the employees in the governance of firms. In particular, the reform would have been much more balanced if at the same time it had been decided to appreciably increase the number of seats for employees on the executive boards of companies, as the CFDT (Conféderation française de travail – one of the main trade unions) requested. This would have enabled the promotion of a genuine European model for economic democracy.

Let’s go back for a moment. Sometimes people think that the rules defining the power of shareholders and employees in joint-stock companies were fixed for once and for all in the 19th century: one share, one vote and that’s it! In reality, this is not true. In the 1950s, the Nordic and German-speaking countries adopted legislation which completely changed this balance. The stated aim was to promote ‘codetermination’, that is genuine power sharing between capital and labour. These rules were consolidated over the decades. At the moment, the employees’ representatives thus hold half of the seats on the executive boards of the major firms in Germany and one-third of these seats in Sweden, independently of any capital shareholding. There is a very broad consensus over the fact that these rules have contributed to an improvement in the involvement of the employees in the strategies of German and Swedish firms and, in the last resort, to greater economic and social efficiency.

Unfortunately until recently this movement towards democratisation has not been adopted by other countries to the extent that one might have imagined. In particular, the role of workers has long been purely consultative in French, British and American firms. In 2014 for the first time, a French law attributed one seat with a decision-making vote to the representatives of the employees on the executive board of companies (one seat in twelve, which remains very low). In the United States and the United Kingdom, shareholders still hold all the seats....MORE
HT: Mike Norman Economics who highlights:
All these studies have one thing in common: they demonstrate that reflection on power relationships and property, which for a moment was thought to have been annihilated after the Soviet disaster, in reality is only beginning. Europe and France must take their rightful place.
The magic work — "power."

Le Blog de Jean-Paul Sartre

From the New Yorker:

Saturday, 11 July, 1959: 2:07 A.M.
I am awake and alone at 2 A.M.
There must be a God. There cannot be a God.
I will start a blog.